Identifying non-resident businesses affected by the new law

We have utilised third-party data and undertaken significant internet profiling to identify non-resident businesses we believe are affected by the law. In some cases, we have used tax treaties with other countries to confirm these business details. As such, you may receive a letter or phone call from us telling you about the new law. This is to raise awareness and provide links to more detailed information so you can comply with the law.

We have also developed a new simplified GST system, where non-residents can register, report and pay in a fully secure online system.

Our approach to compliance during the first year of operation

In the first 12 months of the law, we will take a measured and practical approach to compliance. If you have taken reasonable steps to meet your legal obligations and still find that you are not fully compliant, we will support you. For example, if you can show you have taken reasonable steps to comply, such as setting up systems, but have had a system failure, no penalty will apply.

Compliance approach after the first year of operation of the law

After the first year, we will undertake our usual enforcement procedures if a non-resident supplier has not registered for GST or is not remitting GST on its sales to Australian consumers. We will:

register the non-resident supplier

assess the amount of GST payable and apply a penalty.

This is specifically required by Australian tax law. Compliance audits and risk reviews are part of this process.

If you have not contacted us after we have written or called you we can:

calculate your business liability (using third party information – for example, bank information) from the date of commencement of the law (1 July 2017)

apply the general interest charge (GIC) to outstanding amounts from earlier periods

raise and issue a default assessment with an additional 75% administrative penalty

work with the tax authority in your country to collect the debt.

Apply GST correctly to your sales

You must apply GST to the amount charged for your supplies of imported services or digital products to Australian consumers.

An Australian consumer is an Australian resident who:

is not registered for Australian GST, or

if registered, does not purchase the imported service or digital product for business purposes.

You don’t have to include GST in the amount charged for cross-border supplies of digital products and other services made to either:

GST-registered Australian businesses

residents of other countries.

To work out if you are dealing with an Australian consumer you need to:

use information captured in your business systems or obtain information to reasonably identify Australian residents

exclude Australian businesses by obtaining an Australian business number (ABN) and a statement that they are GST registered.

Australian consumers that provide ABNs to avoid paying GST

Some Australian consumers may incorrectly represent themselves to avoid GST by:

claiming to be a GST-registered business, and

giving you an ABN that does not belong to them.

This is a serious and deliberate breach of the law by the Australian consumer and penalties apply as follows:

60 penalty units (currently $10,800) if the statement was intentionally false or misleading

40 penalty units (currently $7,200) if the statement was found to be reckless, and

20 penalty units (currently $3,600) if the false or misleading statement resulted from a lack of reasonable care.

Information from other countries

We have arrangements with other countries to share information to identify the legal entity behind e-commerce websites and communicate with them – for example, bilateral tax treaties and the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Financial data

Advances in our data-matching technology mean we are fully capable of keeping track of the digital economy. We currently obtain more than 650 million pieces of data a year from third-party sources, including bank records.

We can obtain third party credit card transactional data for purchases made on the internet from non-resident businesses. This data can be used to make an assessment of GST payable.

Tell us if you suspect non-compliance

If you think someone may be deliberately evading tax, you can report it to us confidentially online.

Your rights and obligations

From 1 July 2017 goods and services tax (GST) applies to imported services and digital products to Australian consumers. Consistent with our 'whole of ATO' approach, compliance strategies for the new law are designed to achieve positive and sustainable levels of taxpayer engagement. Community confidence is critical to knowing whether or not we have been effective in discouraging non-compliant behaviour.

Our commitment to you

We are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and meet your obligations.

If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take.

Some of the information on this website applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information.

If you feel that our information does not fully cover your circumstances, or you are unsure how it applies to you, contact us or seek professional advice.